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Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter; a forum for us to use our meager abilities to make the world of specinvestments a better place. |
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1/25/2005
The Clustering Illusion, by GM Nigel
One of the main enemies of the chess player (and indeed mankind) is in attempting to associate outcomes of individual games with certain behavior, when in fact no pattern existed. So we end up jumping around nervously from one idea to another (often regarding the opening, lucky pens or shirts etc) when in fact it was just father random at work.
"The clustering illusion popularly refers to the natural human tendency to "see patterns where actually none exist." Since according to a branch of mathematics known as Ramsey Theory complete mathematical disorder in any physical system is an impossibility, it may be more correct to state, however, that the clustering illusion refers to the natural human tendency to associate some meaning to certain types of patterns which must inevitably appear in any large enough data set."